As inflation continues to ravage the lives of ordinary Americans, all eyes are on the Federal Reserve’s plans to remedy the situation. While St. Louis Fed President James Bullard plans to aggressively raise the bank’s interest rate, Atlanta Fed President Raphael Bostic believes the central bank needs to exercise caution.

Atlanta Fed President Raphael Bostic: “The Fed must be careful as we move forward”

The US economy is looking grim after two years of abnormal inefficiency that have plagued citizens’ wealth. Blame has been placed on erratic spending decisions by public policymakers, the Federal Reserve’s massive monetary expansion over the past two years, the shock to the supply chain from aggressive Covid-19 lockdown procedures, and the toughest sanctioned economy in decades to come as a result of the current Ukraine . Russia conflict. All of these factors have resulted in the fastest rising rate of inflation the US has seen in over 40 years.

On Monday, Federal Reserve Bank of St. Louis President James Bullard said the Fed could raise the bank’s interest rate to 3.5% by year-end. Bullard mentioned an aggressive rate hike that could see rates rise 75 basis points, as did Fed Chairman Alan Greenspan in 1994.

Despite Bullard’s intentions, a report by Wall Street Journal contributors Jon Hilsenrath and Nick Timiraos, published Monday, said that “the Fed has never successfully solved a problem like this.” The Hilsenrath and Timiraos report goes on to say that “many factors are getting out of hand [the Fed’s] control” and “they are clearly lagging behind”.

While Bullard looks to raise interest rates drastically, Atlanta Fed President Raphael Bostic has expressed caution about aggressively raising the bank’s interest rate. Speaking to CNBC’s Sara Eisen on Tuesday, Bostic said he believes staying neutral is also a top priority.

“I think I’m in the same areas philosophically as my colleagues,” Bostic explained. “I think it’s really important that we go neutral and do that quickly.” However, Bostic’s planned neutral reference rate differs significantly from Bullard’s 3.5% through the fourth quarter of 2022. Although it could be 2-2.5%, the Atlanta Fed President said he could also cut the rate to 1.75%.

“I’m really targeting to see one and three quarters by the end of the year, but it could be slower depending on how the economy plays out and we’re seeing a bigger slowdown than I’m seeing in my base model,” Bostic noted during the interview. “It’s one of the reasons I don’t really want to explain that we want to go way beyond our neutral position because that could be more hikes than are warranted given the nature of the economic environment.”

The Atlanta Fed President added:

[The Fed] must be careful as we advance. We need to get away from zero, I think zero is lower than we should be right now. But at the same time we just have to be careful.

US President Joe Biden blames the Covid 19 pandemic and Russia’s Vladimir Putin for the high prices

Of course, many are skeptical that the Federal Reserve will be able to solve the economy’s ongoing problems. Many blame the Fed’s money and wealth expansion and massive stimulus packages by former President Donald Trump and current US President Joe Biden.

However, Biden blames the poor economy on Covid-19 and Russia’s Vladimir Putin. “I know families are still struggling with higher prices. I grew up in a family where we sensed when the price of gas went up,” Biden said called on Twitter on April 20th. “Let’s be absolutely clear why prices are high right now: COVID and Vladimir Putin,” the president added.

Biden’s remarks were heavily criticized on Wednesday when the finger was pointed directly at the Fed’s money printing. “Of course, it has absolutely nothing to do with the Federal Reserve’s ‘Wall Street money printer,'” said one person called in response to Biden’s tweet. “Not all of us have dementia Joe, some of us are still aware and can see you and your administration are full of shit,” the person added. Another person replied to Biden and wrote:

Actually POTUS, it was because YOUR Federal Reserve printed too much money during Covid. Don’t make Putin the scapegoat for your mismanagement of the economy.

tags in this story

1.75%, 3.5% to Q4, Atlanta Fed President, Benchmark Bank Rate, COVID-19, Donald Trump, Economy, Erratic Spending Decisions, Federal Reserve, High Prices, Inflation, Interest Rates, James Bullard, Joe Biden, Monetary Expansion, Money Printing, POTUS, Raphael Bostic, St. Louis Fed President, Stimulus, US Federal Reserve, Vladimir Putin

What do you think of Atlanta Fed President Raphael Bostic saying the Fed should be cautious about raising interest rates? What do you think of Biden blaming Covid-19 and Putin for the failings of the US economy? Let us know what you think about this topic in the comment section below.

Jamie Redman

Jamie Redman is the news director at Bitcoin.com News and a Florida-based financial technology journalist. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for bitcoin, open source code and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about today’s emerging disruptive protocols.




photo credit: Shutterstock, Pixabay, WikiCommons

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